CHARACTERISTICS

Industrial DSM programs target one of the four groups of primary end-use electricity applications: motor drives and controls; process applications; lighting; and space conditioning.⁴

Currently, industrial energy use produces almost half of global CO₂ emissions, yet energy intensity varies dramatically. In many developing countries, energy intensity is two-to-four times greater than the average in OECD countries. Improvement in industrial energy efficiency can potentially have a tremendous impact on reducing GHG emissions.

Industrial DSM activities can encompass a broad range of utility/customer interactions including: load management; interruptible rates; time-of-use pricing; and end-use applications. Electricity reductions can be achieved through fuel switching, cogeneration and process energy efficiency improvements. Results of industrial DSM programs can include: reduced capital requirements; reduced energy consumption; reduced spoilage/waste; flexibility of raw material base; greater control over production; improved product quality and yield; decoupling of production from fuel supply; increased competitiveness; increased production at less energy per unit produced; and reduced environmental impacts (net and/or site).

SIZE:
Programs can target individual facilities, specific industries or the entire industrial sector.

FEATURES:
In the U.S., the industrial sector accounts for approximately 40% of energy and electricity consumption. This large industrial market represents major opportunities for large increments of load growth, conservation, and load management.

COST:
Varies with program. Can be minimal (shifting usage) or can involve installation of new computer equipment to manage load, etc.

CURRENT USAGE:
In addition to OECD countries, countries such as India, Senegal, Georgia, Jamaica and Mexico have successfully employed DSM programs to reduce industrial demand.

POTENTIAL USAGE:
One estimate is that DSM can reduce worldwide electricity demand (from business-as-usual) 3-7% by the year 2010 and 5-6% by the year 2050. Significant emissions reductions to date have been experienced in OECD countries in the chemicals, steel, aluminum, cement, paper and petroleum refining industries.

ISSUES ASSOCIATED WITH IMPLEMENTING ACTION

• Existing capital has a long life; equipment upgrades may not be needed for a number of years.
• At many plants, there may not be anyone directly responsible for energy efficiency; and decision-makers are often located far from regional plant sites.
• Modifications to industrial manufacturing processes are complex, and can affect product quality and productivity. Because of the high cost of process modifications and limitations to coordinating them with facility shutdowns, energy cost savings alone may not be sufficient to meet industry's payback and return-on-investment (ROI) requirements.
• Energy efficiency expenditures are not competitive on a rate-of-return basis with product improvement expenditures. Also, electricity is a small part of many companies' overall costs so they may dismiss potential energy cost savings as insignificant.
• It is difficult to standardize industrial DSM applications because many companies consider their production processes proprietary, and need assurances that their operations will be kept confidential.

CLIMATE CHANGE IMPACT

EMISSION EFFECT:
    

CONDITIONS FOR EMISSIONS MITIGATION:

• The amount of emissions decreased or avoided will depend on the technologies used before and after the energy efficiency program and the generation mix.

EMISSION ESTIMATE:
Varies according to the change in electricity demand before/after implementation of the DSM program.

COST-EFFECTIVENESS:
Varies according to the administrative or investment costs required. Some investments are cost-effective regardless of energy savings achieved.⁵

SECONDARY EFFECTS:
Varies according to the decrease in electricity demand. For every kWh of fossil fuel power generation avoided, the associated emissions of air pollutants are also avoided.

RESOURCES

• The Industrial Energy Efficiency Network (IEEN) was established by the Norwegian government in 1989 to promote energy efficiency. IEEN works with individual companies in 13 industrial sectors, to disseminate information, provide technical data on new technologies, and compile statistics on energy usage. Results have varied within industrial sectors, but many companies have achieved from 10-50% reductions in energy consumption. http://www.ife.no/departments/energy/index.html
• The U.S. Department of Energy has sponsored the following industrial DSM programs:
  1. Motor Challenge to promote voluntary collaborative efforts between the private and public sectors to demonstrate, evaluate, and accelerate the use of efficient industrial electric motor systems.
  2. National Industrial Competitiveness for Energy, Environment and Economy (NICE³) that awards grants to improve industrial process efficiency, reduce waste, and cut greenhouse gas emissions in several key industries.
• Brazil's PROCEL, the national electricity conservation program, developed demand-side management projects saving 250 MW in electricity and US$500 million in power plant development costs.
• Mexico's federal electricity conservation program, Fideicomiso de Apoyo al Programa de Ahorro de Energia del Sector Electrico (FIDE), conducted innovative energy efficiency demonstration projects that brought a 5% decline in projected energy use.
• Studies have concluded that in China alone, raising the efficiency of industrial furnaces–which consume about 25% of China's energy–would reduce the energy used by furnaces by 40% and avoid the waste of about 2.7 quadrillion Btu (2.9 EJ) per year.
• Lawrence Berkeley Laboratory has worked with the U.S. Agency for International Development to support efforts to develop motor standards in the Philippines.
• Information on the European Conference on Industrial Energy Efficiency can be found at http://www.eva.wsr.ac.at/indeff/prog-e.htm.
• The Alliance to Save Energy provides links to more information on industrial energy efficiency at http://www.ase.org/programs/industrial/links.htm.
• The European Union (DG-XVII) sponsors a number of energy efficiency programs, providing background information and funding. http://www.europa.eu.int/en/comm/dg17/programs.htm

CONTACTS

Alliance to Save Energy
Chris Russell
Washington, DC
Tel: (202) 857-0666
Fax: (202) 331-9588
crussell@ase.org
http://www.ase.org

European Commission, DG XVII
Industrial Energy Efficiency Network
Per Finden, Department Head
Brussels, Belgium
info@dg17.cec.be

Institute for Energy Technology (IFE)
Kjeller, Norway
Tel: +47 63 80 61 07
Fax: (+47) 63 81 63 56
per.finden@ife.no

Lawrence Berkeley National Laboratory
Steve Wiel
Energy Analysis Division
Berekeley, CA
Tel: (510) 486-5396
swiel@lbl.gov
http://eetd.lbl.gov/EA.html

U.S. Department of Energy
Diane Pirkey
Manager of DSM Programs
Washington, DC
Tel: (202) 586-9839
Fax: (202) 586-1640
diane.pirkey@ee.doe.gov

United Nations Environment Program
Industry and Environment
Paris, France
Tel: 33 (1) 44 37 14 50
Fax: 33 (1) 44 37 14 74
http://www.unep.org